

Author 



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16—47372 



/ 

N 7 

The Anti-Option Bill 




The Speech of 

Hon. James Z. George 

of Mississippi 

in the 

Senate of the United States. 




A REVIEW OF SOME 
OF HIS ARGUMENTS 
BY 

Latham, Alexander & Co. 

Bankers and 

Cotton Commission Merchants, 



NEW YORK 



^ 



PRESS OF 
DENNISON & BROWN, 

No. 2 LIBERTY ST. 
NEW YORK. 






TO THE PLANTERS AND COTTON TRADE 

OF THE 

UNITED STATES. 



LATHAM, ALEXANDER & CO., 

Bankers and Cotton Commission Merchants, 

New York, December 29th, 1892. 

On December 13th, 14th and 18th, Senator George, of Mississippi, 
consumed much valuable time of the Senate in delivering a speech in 
advocacy of the Anti-Option Bill, and entered into a discussion of the 
system of cotton contracts for future delivery, conducted by the New 
York and New Orleans Exchanges. 

On July 25th of last year the Senator made a similar speech, and it 
was so full of startling inaccuracies, and showed such an absolute 
unfamiliarity with the business, that we wrote a letter for publication 
calling attention to the misstatements of the Senator, and gave correct 
information of the business transacted in the New York Cotton 
Exchange, and defended the gentlemen of that Exchange against 
the unwarranted assaults of the Senator, which he had evidently made 
without proper investigation. 

In the Senator's speech a few days ago in the United States Senate 
he makes liberal extracts from our article referred to, commenting upon 
them, and we, therefore, deem it proper to write this communication 
to correct some of the Senator's inaccuracies in connection with our 
letter, and to give further information to the people touching the 
business transacted in the New York Cotton Exchange. 

It cannot be expected that we could touch upon all the matter 
contained in the Senator's speech, for it covers twenty-six columns in 
the ' ' Congressional Record. ' ' 



The Anti-Option Bill was introduced in Congress as a measure to 
raise revenue for the support of the Government, and the Senator 
knows that it would not bring one dollar of revenue to the Treasury. 
It is a fraud on its face. The Senator says : 

"I feel, therefore, not only a personal interest in the success of a bill to sup- 
press dealing in futures, but I feel called upon by the highest motives which can 
govern a representative ; that is, the protection of those who have commissioned 
him to legislate for them, to use every exertion in my power to make plain to the 
Senate that which appears so plain to my mind, the injurious effect of the traffic 
intended to be suppressed by this bill. ' ' 

Why was not this bill introduced stating, as the Senator above 
states, that it was a bill to suppress dealings in contracts, and was not 
intended to raise one dollar of revenue by imposing special taxes on 
dealers engaged in buying and selling cotton contracts for future 
delivery on commission ? Would not this have been an honest and 
proper way to express in its caption the meaning of the bill ? 

In the Senator's speech of last July he said : "They sell 30,000,000 
bales of cotton a year against the farmer, ' ' and contended then, as he 
does now, that the low prices for cotton were occasioned solely on 
account of transactions of the cotton merchants in the City of New 
York. In less than four months — from September 1st to December 
27th — 21,708,400 bales of cotton have been sold in the New York 
Cotton Exchange, and, in spite of these sales, which the Senator com- 
plains of, the planters' cotton has advanced in price 2^ cents per 
pound. If his statement last July was correct — that cotton contracts put 
the market down — there is no escape from the admission that cotton 
contracts this year put the planters' cotton up. At the last Session of 
Congress the Senator should have said that, during the past three 
years, 25,059,878 bales of cotton were forced upon the market by the 
planters for sale, and that this enormous over-production caused cotton 
to decline ; and he might have said, in his recent speech, that the small 
production of this year had caused the planters' cotton to advance. 
Why does not the Senator frankly and candidly state the facts when 
making a speech on a great economic question ,that involves every 
material interest of the people of the South ? When disaster comes to 
the planter, and suffering follows in its trail, why should the Senator 
attempt to put upon the shoulders of a small body of innocent men the 
responsibility that should be borne by the planters themselves ? 



The Senator takes from our letter a paragraph, discusses it at great 
length, and attempts to prove that the cotton market of New York 
controls that of other markets in this country, and oftentimes the 
markets of the world. The Senator occupied the time of the Senate in 
order to make such proof, when, in our communication, we admitted 
what the Senator wished to prove, but stated New York cotton dealers, 
by their own operations, do not control prices, but they represent 
planters, operators and dealers, not only in the United States, but all 
over the world, and the sentiment consolidated here makes the price.. 

We quote from the Senator's speech : 

"What is a representative, Mr. President? He is a man who acts in the place 
or stead of another, having authority or credentials so to do. Who gave these 
men the authority they have assumed ? Where are their credentials to act for the 
farmers of Mississippi or Arkansas in fixing the prices of cotton for the world at 
large? They admit they fix the prices, but they say they do it as representatives. 
I dispute their authority. I say, ' Your assumed power of representation is an impu- 
dent usurpation — you represent nobody but yourselves. ' Accordinglto this paper, 
they do fix the price of cotton ; and, when men have the power to fix the price of 
any commodity, they fix it in their own interest." 

The Senator denies that the New York Cotton Exchange is the 
representative of buyers and dealers throughout the world. This 
denial is so sweeping and untrue that we are astounded that he should 
make such a statement ! Is it possible that Senator George knows so 
little about transactions in cotton in the City of New York that he is 
willing to put in print such a statement as this ? With the same pro- 
priety the Senator might have said that the officers and Board of 
Directors of a bank do not represent its stockholders and depositors. 
The Senator states that ' ' there are one hundred and sixty-three cotton 
commission firms, fifteen bankers, three bank presidents, besides some 
two hundred and fifty other dealers in cotton, who are members of the 
New York Cotton Exchange — and what does he suppose these men do ? 
Many of them do not have one dollar's interest in the transactions in 
the New York Cotton Exchange — they represent men from nearly every 
State in the Union ; they represent men in nearly every city and town 
in the States of Mississippi and Arkansas, who send them their money, 
and instruct them to buy and sell cotton for their accounts, and the 
only interest they have in the cotton market is a small commission that 
they receive for their services in carrying out the wishes and orders of 
their clients. If the Senator were in the City of New York to-day, he 

5 



Could be shown thousands of telegrams and letters that reach New 
York every day from all parts of the world, giving positive instructions 
to buy and sell cotton. 

As stated in our previous letter, the members of the New York 
Cotton Exchange do not control prices — they could not do so. If 
every firm and member of the New York Cotton Exchange were to 
pool their capital and get the aid of half the banks in the Chy of New 
York, they could not arbitrarily control the cotton market of the world, 
because they would have to contend against the opinions of thousands 
of dealers in every section, and these dealers would overmatch them 
in money, and they would be swept away like straws. To sum up the 
aggregate wealth of parties who buy and sell cotton in the New York 
Cotton Exchange outside of its membership would amount to five 
times as much as the total capital of every bank in the City of New 
York. A single broker without capital on the floor of the New York 
Cotton Exchange oftentimes has great influence on the market, 
because that broker has orders in his pocket to buy and sell cotton for 
responsible dealers, firms and banks, who can back up his transactions 
with far more money than a number of the richest firms in New York 
possess or could control. If fifty business firms in the City of New 
York should send to Senator George large sums of money to invest in 
real estate in Washington, and instruct him to buy at the best price, 
but without limit, he would overwhelm every local dealer, because the 
Senator would buy all the real estate at the market price, and offer to 
buy more at a higher price. 

It would appear that Senator George believes, and other people 
believe, that the New York Cotton Exchange is a joint-stock company ; 
that its business is conducted as the business of a bank ; that the 
profits and losses resulting from its operations are divided pro rata 
among its members. The fact is the New York Cotton Exchange is 
simply an organization composed of business men who represent the 
cotton trade of the world ; each firm or member does business in its 
own way, and the opinions of these members of the Exchange are 
always at variance. If all were selling against the planter, as the 
Senator has stated, there would be no buyers, no market, no Exchange. 
If all were buying, there would be no sellers, no market and no 
Exchange. The New York Cotton Exchange simply owns a building, 



in which its members meet to transact business. They have an organi- 
zation like that of an}- other corporation, and why should the Senator 
make the incorrect statement that ' ' the members of the New York 
Cotton Exchange have no authority except themselves, and that they 
fix the price of cotton to suit themselves ; that they represent nobody 
but themselves ; and, when fixing the price, do so for themselves ? ' ' 
The foregoing quotation from the Senator's speech would lead one to 
suppose that the members of the. New York Cotton Exchange meet 
together in the morning and fix the price of cotton for the day, when 
it is a fact, that if any member of the .New York Cotton Exchange 
could tell one hour ahead what the price of cotton would be, he could 
command a salary of a million dollars a month. In a short time, this 
man, who could look into the future of this Exchange, and could pre- 
dict the price of cotton, could make all the money that exists in 
America. Has the Senator from Mississippi given up thinking ? Is 
he prejudiced ? Will he believe facts, or does he prefer to believe 
fictions ? 

We quote from the Senator : 

"I see it is claimed by Latham, Alexander & Co., in their reply to me, that 
there are several planters or raisers of cottomamong the membership of the New 
York Cotton Exchange of New York. I do not doubt their statement; but I 
suspect it is true only in the sense that some persons [like Mr. Latham] engaged 
principally as bankers or in some other mercantile pursuit have an interest in 
planting cotton. 

"I want to get a list of all the members of the Cotton Exchange of New York 
with their residence and occupation ; I want as to those stated to be planters of 
cotton," &c. 

The Senator stated in his speech last July that there were no 
planters — no, not one — who were members of the New Orleans Cotton 
Exchange. He also stated that he presumed that there were no 
planters who were members of the New York Cotton Exchange. 
Before making this positive statement, it would have been proper for 
the Senator to have investigated the facts. In our article we corrected 
the Senator, and stated that there were planters in both Exchanges. 
In his recent speech he admits that there are members of both 
Exchanges who have money invested in plantations, who cultivate 
them and raise cotton, as all other planters do, but he virtually says 
that these planters are amateurs and are engaged in other kinds of 
business. In a word, that they do not live upon their plantations and 



cultivate cotton solely for a living. The Senator's point in the first 
place was immaterial — it had no relevancy to the Anti-Option Bill. 

It makes no difference whether the members of the New York and 
New Orleans Exchanges are planters or not. Every planter in the 
South can join the New York Cotton Exchange, and receive all of its 
benefits, just as any banker or merchant in New York does. 

Some of the farmers' organizations are very close corporations — 
they do not throw their doors open to the world, as the New York 
Cotton Exchange does, but they exclude bankers, lawj^ers, &c, from 
their deliberations. Although the Senator is a "dear friend" of the 
Southern planter, he, being an attorney at law, is not eligible to 
become a member of one of their organizations. 

The Senator says he has a personal interest in cotton, he is a cotton 

planter. As we understand it, his profession is that of an attorney at 

law in Carrolton, Miss., and his present position is that of a Senator of 

the United States, residing in Washington. And so it appears any 

man can be a planter, no matter whether he lives on his plantation or 

not. And there was no occasion for the Senator to waste precious 

time in making a long argument on such an immaterial point. 

We quote again : 

" I propose now to consider somewhat the performances of that exchange 
with reference to cotton ; and now I wish to state, while it controls the cotton 
market of the country, and, as claimed by Latham, Alexander & Co., the price ot 
cotton throughout the w r orld, New York only received in the last commercial 
year, 1891-92, the amount of 165,576 bales of cotton. It received about the same 
in the year before, upon which I commented in my speech made at the last 
session of Congress. I was replied to by the statement that I knew nothing about 
the business of the great City of New York ; that over 784,000 bales of cotton were 
exported from the City of New York to Europe, and that 784,000 bales of cotton 
were added up as a part of the business of New York in cotton. I quote from their 
paper : 

" The following are the official figures showing business done in New York for 
the cotton year of 1890-91 : 

Cotton exported to Europe bales, 784,058 

Cotton sold from table " 146,805 

Actual cotton delivered on contract " 144,703 

Total bales, 1,075,566 

" This does not include the large receipts of cotton that pass through this 
city and remain unsold in this market. 

" To show that I was right, and that the representatives of the Cotton Ex- 
change of New York have made a very serious mistake as to the importance of 
New York as a cotton market, I propose to read something to the Senate, which 
I presume will not be controverted." 



As the Senator states, there was an omission in our statement 
showing the cotton trade of New York. The omission, however, was 
against its. We became aware of it immediately after our article was 
printed, but too late to insert it. It was not a difficult matter for the 
Senator or any other reader to detect it. The omission w 7 as that the 
total receipts of cotton in the City of New York last year were 
1,524,249 bales. In our statement we simply put the net receipts — 
those coming from plantations — that were not previously counted at 
the ports. It would be impossible for the Senator to belittle the trade 
of New York in cotton or anything else. A city is not to be spoken 
out of importance that received 1,524,249 bales of cotton, carried in 
her warehouses on March ioth, 410,152 bales, worth some fifteen or 
twenty millions of dollars, and which was nearly one-half of all the 
cotton carried in all the other American ports put together, and at the 
end of the cotton year, September 1st, held in her warehouses 263,671 
bales of cotton, which w r as 108,223 bales more than all the other ports 
put together, and to-day holds in her warehouses 302,025 bales of 
cotton, which is more than a fourth of all the cotton held in ware- 
houses in all iVmerican ports, notwithstanding the fact that the 
Southern ports at this season of the year hold unusually large stocks. 
Such is New York's record. 

In the Senator's speech last July, he stated that the commission of 
the New 7 York Cotton Exchange w T as $10 for buying and $10 for selling 
100 bales of cotton. We stated that this statement was incorrect. 
We quote what he says in his recent speech : 

"You see that the New York Exchange, through its representatives who 
undertook to reply to me, and had the reply published, paying for it, in the 
leading papers in every cotton State of the country, made a slight mistake, or else 
they have solemnly published to the world a falsehood. 

"The rates of commission shall be as follows : 

" Twelve and a half cents per bale for each and every bale bought or sold, 
when the transaction is made for any party not a member of the Exchange." 

Previous to March 4th, 1885, the rules and regulations of the New 
York Cotton Exchange stated that a commission of twelve and a half 
cents per bale for buying cotton, and twelve and one-half cents per 
bale for selling cotton was the rate of that Exchange, and to violate 
this rule by charging a lower rate would subject the party to expulsion and 



loss of his membership. On March 4th, 1885, by a vote of the Exchange, 
the penalty for the violation of the commission law was removed, and 
since that date the usual commission for buying and selling cotton has 
been $5 per 100 bales for buying, and $5 per 100 bales for selling. The 
law remains in our rules and regulations in order that no broker or 
merchant can rightfully charge a customer more than twelve and a 
half cents per bale for buying, and twelve and a half cents for selling. 
The foregoing statement of ours is true, and will be verified not only 
by every member of the New York Cotton Exchange, but by numberless 
dealers in cotton contracts in New York residing in the State of Missis- 
sippi. The commission for buying and selling 100 bales of contracts at one 
time was 2}i per cent, on the value of the cotton, and $50 brokerage ; 
at that time cotton was higher. It cost a customer oftentimes in those 
days more than $300 to buy and sell a contract for 100 bales of cotton. 
Hence, the Senator will see that the broker's commission on cotton con- 
tracts has declined from $300 to $10. The decline in the commission 
has been much greater than the decline in the planters' cotton. It is 
astounding to us how a Senator can show such an utter want of knowl- 
edge of the business — from whom does he get all this incorrect infor- 
mation? Does he seek information, intentionally, from parties who 
know nothing whatever about cotton transactions in the City of New 
York ? Does he wish to enlighten his constituents or keep them in 
the dark ? Does the Senator make no exertion at all to find out the 
simplest facts about the New York Cotton Exchange ? 

In the foregoing quotation from the Senator's speech, as well as 
in another paragraph of his speech, he says that we are leading 
bankers and brokers and representatives of the New York Cotton 
Exchange, <flc. Our firm does not represent the New York Cotton 
Exchange in any manner, shape, or form. We conduct business on 
that Exchange daily, but we have no authority whatever to speak 
for it. We hold no official position in it, and what we have said 
about the Senator and the Anti-Option Bill we have said on our 
own account as a business firm, and not at the instance of any indi- 
vidual or of the Cotton Exchange. The Senator says the publication 
of our article was paid for. Of course, it was paid for — what of that ? 
The press of the South have extended to us man}' courtesies, by the 
publication of small articles that we have written, and they extended 

10 



to us further courtesies in the publication of our letters on this subject 
at greatly reduced rates. We could not expect a newspaper to give 
up twelve or thirteen columns for any matter that we might write, no 
matter how well it might be written, unless we paid something for it. 
Let the Senator send his speech to some of the papers in which our 
article was published, and he will find out whether they will publish 
it without cost. Some of them might write him that they would not 
publish it for money, because his speech gives but little information 
touching cotton contracts in the City of New York, and his arguments 
in favor of the Anti-Option Bill have but little relevancy to that Bill, and 
would not be interesting to intelligent readers. Our letters were writ- 
ten with the view of giving information to the people upon a subject 
that many did not understand. Neither the New York Cotton 
Exchange nor any firm or individual of that Exchange ever con- 
tributed one penny towards the publication of our letters. We make 
this statement as full as possible, because it has been charged and 
printed in the South that our letters were written at the instance of a 
syndicate in New York of unlimited means, and that the publication 
of our letters was paid for by that syndicate. This statement is 
without a shadow of foundation in truth. 

The Senator dwells at length upon the fact that the New York 
Cotton Exchange requires cotton to be put in licensed warehouses, to 
have licensed inspectors, weighers, samplers, &c, and says that the 
Cotton Exchange monopolizes the trade of New York. As, perhaps, 
nearly every merchant in New York dealing in cotton is a member of 
the Cotton Exchange, they naturally monopolize the trade, just as the 
Senator and the other attorneys at law in Carrolton monopolize the 
legal business in that city. The warehouses are selected because they 
are fireproof buildings in convenient localities, and because the ware- 
housemen are highly responsible and honest. The weighers, inspect- 
ors, &c, are licensed because they are thought to be honest, and have 
been engaged in the business for many years, and understand it thor- 
oughly. It is not necessary for such license to come from any State or 
city, as the Senator says. The cotton dealers in New York simply 
agree to have these experienced men transact the business of the 
Exchange. Does not the farmer prefer to select the best men he can 
get to cultivate cotton? From the Senator's speech it would appear 



that it would be all right for the Cotton Exchange to select its inspect- 
ors, weighers, samplers, &c. , from all of the various trades. 

If the Senator had spent a portion of his vacation on the floor of 
the Cotton Exchanges in New York and New Orleans, and had exam- 
ined the books of bankers, cotton merchants, and dealers who daily 
make large transactions in the Exchanges for parties all over the 
world, it would have been impossible for him to have made such a 
speech as he delivered in the Senate. The trouble about the Senator is 
(and we judge solely from what he says), that he seeks information 
from sources where correct information and a knowledge of the busi- 
ness do not exist. If the Senator desired to learn something about 
gold and silver mining, he would probably go to Colorado, California, 
or Mexico ; he would certainly not go to planters who raise cotton in 
the Mississippi Valley to gain information on this subject. 

We quote again : 

"I should like to read something as to the margins, but I have taken so much 
of the time of the Senate that I shall not detain it, but will state that the by-laws 
require the margin to be from one to five dollars a bale, and then to be made good 
if there should be any greater rise or fall requiring more money to make the mar- 
gins good. I will average these margins. I will be liberal; I will assume there 
is not much variation in prices, although I will show that there is a great varia- 
tion before I get through. I will assume that only half of the highest sum is 
charged — that is, two and one-half dollars a bale each way. That would be 
|i30,ooo,ooo on 26,000,000 of bales ; but now they have got it up to 40,000,000 
bales, which is about a third more, and so you will have to add one-third to the 
$130,000,000 of margins. Interest must be paid for the use of this money." 

It will be remembered that the Senator, when making his speech 

last July, made the most wonderful statement about margins that ever 

was read. At that time he figured out that it required nearly the total 

value of the whole cotton crop to keep up margins in the New York 

Cotton Exchange. The Senator's estimates this 3 T ear are a little 

reduced, but they are still astounding. Eet us explain to the Senator 

about margins. The rules and regulations of the New York Cotton 

Exchange say : ' ' Either party to a contract for the future delivery of 

cotton shall have the right to call an original margin of from $1 to $5 

per bale at the time of signing the regular contract, or at any time 

prior thereto, and may also demand that $1 of the amount so called 

shall, within one hour after the receipt of such demand, be deposited 

with the superintendent of the Exchange in current funds or a certified 

check. 

12 



In addition to the original margin, either party to a contract can 
call for additional margin as the fluctuations of the market occur. 
When such margins are called for, certified checks must be drawn to 
the order of and deposited in a Bank or Trust Company (to be desig- 
nated by the party calling), which Bank or Trust Company must be in 
good standing. 

Bankers, merchants, brokers, and dealers, who are members of the 
New York Cotton Exchange rarely, if ever, call upon each other for 
original margins. In our long experience in the business we have 
never called for but two original margins, and have never been called 
on for original margins, excepting on two occasions. The merchants 
have the right to do so, but the right is not exercised, because their 
contracts are considered safe, and besides, they have the right, at all 
times, to call upon each other for margins to cover the variations in 
the market. When an original margin is called, it is because the 
party calling does not have confidence in the strength of the party 
upon whom he calls. The calling of either an original margin or a 
margin on account of variations in the market is purely discretionary 
with the dealer. Firms oftentimes have large transactions with each 
other, without any margins being called. When they are called, 
margins must be put up in cash or certified check at certain hours of 
the day, and there is no credit, nothing fictitious, no device to avoid 
putting up margins, as Senator George stated there was in his speech 
last July. On numerous transactions in the Exchange between buyers 
and sellers direct settlements can be and are made, and no margin is 
required upon such transactions. The Senator's calculations and 
figures concerning margins are absolutely valueless. After an active 
business experience of twenty-three years in the City of New York, it 
is our opinion that at no time since the foundation of the New York 
Cotton Exchange was there ever deposited as much as $10,000,000 in 
margins. Because the rules and regulations give parties to a contract 
the right to call original margin and other margins, Senator George 
assumes, when he could have known differently, that the right is 
rarely exercised, and the rule exists to cover particular cases that might 
arise in the transaction of the business of the exchange. Why will the 
Senator discuss the question of margins in the New York Cotton Ex- 
change, when he is so lamentably uninformed on the subject ? 

13 



We quote from the Senator again : 

"Jerome Hill, of St. Louis, one of the most extensive and intelligent cotton 
factors in the United States, estimates the loss of the farmer by their future 
dealings at $100,000,000 a year." 

Mr. Jerome Hill, of St. Louis, is not an authority on cotton contracts 
in the City of New York. He is not an authority as regards the price 
of spot cotton even in Arkansas and Texas, to which sections his busi- 
ness is principally confined. In his circular letters he is continually 
writing about the poverty of the South. This is also a pet theme 
with the Senator when he pleads so earnestly for the "dear farmer.'' 
If the planters in the South lose $100,000,000 a year, they must be 
rolling in wealth, and must have lost within the past twenty-three 
years, according to the estimate of the distinguished statistician, Mr. 
Hill, $2, 300,000,000. If Mr. Hill be correct, it would have been far better 
for the people in the South to have compromised with the New York 
Cotton Exchange, and turned over to it each Southern State for mar- 
gins and losses. The total value of the cotton crop last year was only 
§391,424,716; hence, the farmers in the South lost more than one- 
fourth of its total value in cotton contracts. Such a statement as this 
is simply ridiculous. The planters in the South, in our opinion, never 
lost $5,000,000 in cotton contracts last year — many of them made 
money. This year it is a notorious fact that the South has made many 
millions of dollars by buying and selling cotton contracts in New York 
and New Orleans. 

The Senator copies extracts from a number of telegrams and circular 
letters from merchants and dealers in cotton contracts in New York 
and New Orleans, showing how the cotton market is affected tempo- 
rarily on account of various influences that occur each da}". None of 
these letters show that cotton went up or down on account of illegal 
methods. But the Senator has one standard, one trusted authority on 
cotton contracts, whose experience has been world-wide — he knows it 
all. He may have " been there " himself in a small way, by proxy, and 
the Senator sticks to him through thick and thin. He seems to be the 
Senator's only authority. 

The Senator introduced this good friend to the Senate of the United 
States last summer, because the Senator thought that he had extended 
his visions beyond the confines of Texas and Arkansas, and he read 



from his pen, for the information of the Senate, a remarkable circular 
letter touching cotton contracts in New York, &c. 

In the Senator's recent speech he could not refrain from introducing 
again the authoritative opinion of his adviser. 

We quote : 

"Now, I read from a firm that is on the other side [meaning the Senator's 
side] — The Jerome Hill Cotton Company. I am authorized to say with reference 
to that firm that it has handled within the last twenty-five years in the Southern 
markets, Memphis and St. Louis, more cotton than any other factoring house in 
the country. They close up by saying : 

" 'While the situation really is growing stronger each day by reduction of the 
surplus and bad reports from the crop, cotton is being forced down by illegal 
methods. ' 

" Now, Mr. President, we have the facts." 

When the Senator's oracle on cotton wrote the letter saying that 
cotton was being forced down by illegal methods, there was some 
temporary reaction in the market on account of realization of profits 
and other causes ; but, when the Senator read the article for the inform- 
ation of the Senate, cotton was advancing, and it to-day is selling at 
nearly the highest price this season. If it was put down by illegal 
methods, as Mr. Hill says, it must have been put up by the same 
methods. 

When cotton goes down there is something wrong about it, and the 
New York Cotton Exchange is held responsible for it ; but when it 
goes up it is all right, and the direful influences of our Exchange are 
never mentioned. The question is argued in a way something like 
this : "If you do just what we want — advance the price — you are all 
right ; if it is impossible for you to advance the price, then you are 
wrong." The Senator believes, doubtless, that Mr. Hill can see 
through a mill stone. We will show him just how far he can look 
into the future. 

We quote, verbatim, a letter that the Senator's friend wrote, touch- 
ing the future of the cotton market, and the estimation in which he 
held the gentlemen whom he must count on to come into his office and 
buy his cotton. This letter has heretofore been published : 



15 



''St. Louis, Mo., December 4th, 189T. 
"Mr. J. B. Harwood, 

"Fort Smith, Ark. : 
" Dear Sir — 

"Yours of the 2d inst. received, and we are glad to hear from you. The 
spinner buyers have about wrecked the cotton market, aided by the foreigners' 
report of crop and the thieves of the New York and New Orleans Cotton 
Exchange. Please understand we are not blaming the spinner buyers ; but they 
have no interest in the crop, save their commissions for selling, and they offer 
cotton in every direction, underbidding the centre markets ; hence, down goes 
cotton. The factors are powerless to hold cotton up as they used to until these 
people find stocks so reduced they cannot offer. We believe in cotton at present 
low prices. We will be glad to advance you cost on all the cotton you have 
on hand, or will ship to us and draw at sight for it. If there ever was a time in 
the world to buy cotton, this must be the time. 

" The falsehoods as to the crop have run their course. They must face the 
facts. Jerome Hill says we ought to organize a Klu Klux Klan to rid the country 
of pessimists who make a living by following the calling of their ancestor 
" Ananias." We have not seen a single bull article in a Southern newspaper 
this season. Have our people no manhood left that they will allow a lot of stupid 
foreigners who are more cunning than honest to count our crop for us, value our 
cotton and take it at their own sweet will ? The South is almost reduced to 
poverty and want. Her people are brave in war, but timid in finance. How much 
cotton is left in your country as compared with last year? Please let us hear 
from you. 

' ' Yours very truly, 

(Signed) " Hiu,, Fontaine & Co." 
This letter, although signed by Hill, Fontaine & Co., was written 
by Mr. Jerome Hill, who gives the Senator valuable information about 
the contract business in the City of New York. 

Mr. Hill says the buyers for the manufacturers have virtually 
wrecked the market ; that the members of the New York and New 
Orleans Cotton Exchanges are thieves, and that the gentlemen who 
come to our country from Europe to pay us gold for our cotton are 
stupid foreigners more cunning than honest. He further states in his 
letter: " We believe in cotton at present low prices. We will be glad 
to advance you cost on all the cotton you have on hand, or will ship 
to us and draw at sight for." This letter containing Mr. Hill's valu- 
able opinion was written on December 4, 1891, when middling cotton 
was selling at about 8A, and by the first of April had declined to 
6H, and every party who bought and held it upon Mr. Hill's 
advice lost $6.85 per bale upon it. In the fall of 1890 Mr. Hill 
was a howling bull on cotton. He advised the people of Arkansas 
and Texas to buy and to hold cotton, and said he was a bull on it 
until the "dogwood blossomed in the spring." When this advice 

16 



was given, cotton was selling at about 10 cents for middling, and in 
three months after the date he mentioned, there was a loss in it of $10 
per bale. So confident was the Senator's authority that he says in his 
letter : " We ought to organize a Klu Klux Klan to rid the country of 
pessimists who make their living by following the calling of Ananias. ' ' 
He did not tolerate large crop estimates, but adhered to small ones. 
This optimistic Klu Klux Klan intended to destroy pessimists was never 
organized ; if so, the captain and the whole rank and file deserted to 
the pessimists before the ' ' dogwood blossomed in the spring, ' ' and 
the men whom he said were making a living by following the calling 
of Ananias based their calculations upon a 9,000,000 crop of cotton, 
and the enemies of Ananias became his friends. This unique il dog- 
wood ' ' pointer has traveled all over the world ; it has been worked 
into poetry and song in Bombay and Calcutta, and the natives have 
made it jingle up the Nile, but no man engaged in the cotton trade 
will ever use this pointer again. 

We are aware that Mr. Hill in St. Louis handles cotton very largely. 
We should think he would, because he says in his letter to Mr. 
Harwood : ■ ' We will be glad to advance you cost on all the cotton you 
have on hand or will ship to us and draw at sight for. ' ' On these 
terms Mr. Hill should handle nearly all the cotton that is raised in 
Arkansas and Texas, and on the same terms we might have sent him 
a thousand shippers from the Gity of New York. 

We quote : 

" What is hedging? Let us see. A man buys, for instance, a thousand bales 
of cotton ; he pays the money for it, and as I explained, and as they all explain 
here, as I have read in the hearing of the Senate, for fear that cotton will rise or 
fall, if he is a purchaser, he buys a future contract for that, whereby he hedges. 
So as the)- all say, if cotton lises when he sells, his contract will rise when he 
buys. Therefore, there will be neither gain nor loss when the two transactions are 
put together. It is exactly like a man betting $500 on horse A, and, for fear he 
will lose his money, betting $500 more on the opposing horse. The result is when 
the race is run he is bound to lose one bet, but he is bound to win the other ; and 
so he comes out even. So with this hedging all the way through." 

The Senator does not understand hedging, nor the great value of 
contracts for future delivery. A dealer in cotton buys a thousand 
bales in Memphis, and in order to protect himself he sells one thousand 
bales of cotton in New York. It is rarely the case that the buying and 
selling take place simultaneously. The buyer sells the contracts on 

17 



some temporary advance, and thereby has a margin of profits to begin 
with. This margin of profit and the contract protect him until his 
cotton reaches its destination, say Liverpool. When the contract that 
is sold declines, he may buy another contract to close out, and hold his 
cotton without protection in Liverpool. Afterwards, if it advances, he 
makes money ; if it declines, he loses money, but the contract shows 
him a slight profit, and has protected his one thousand bales of cotton 
from Memphis to Liverpool. Another buyer bu3^s one thousand bales 
of cotton and ships it to Liverpool without hedging. By the time this 
cotton reaches New York to be put on shipboard the Liverpool market 
looks weak. The buyer then wants to hedge and limit his loss. A 
planter has a fine crop of cotton growing in his field in August, and 
is perfectly satisfied with the price of December contracts. He tele- 
graphs to New York to sell five hundred bales of cotton, deliverable in 
December ; by this means he hedges his crop, for he knows if Decem- 
ber contracts decline he will make a profit on his contract sale, and 
this profit will cover the loss that he makes on his spots. He ships his 
cotton to his commission merchant, directs its immediate sale, and 
then orders his contracts to be bought back in New York. 

Cotton mills enter into engagements for the delivery of goods for 
future delivery. In order to sell these goods they must fix the price, 
and they do this by buying cotton contracts for future deli\ T ery to pro- 
tect them against any possible loss between the price at which they 
sell the goods and the cotton they buy to spin. A mill having confi- 
dence in the market will oftentimes buy several months' supply of 
cotton. After getting the cotton in store, they may lose confidence in 
it. If so, they telegraph to New York to sell for future delivery the 
cotton they hold in the mills, and afterwards buy back the contracts 
as the cotton is spun, and thus they are hedged against decline. 

A spinner wishes to buy certain grades of cotton in Texas, and 
must send his representative there to buy them. Before doing so, he 
will buy to hedge so many bales of cotton in contract form in New 
York ; and, as his representative in Texas buys the cotton, he sells out 
the cotton contracts that he has previously bought in New York ; thus, 
he protects himself against the contract that he made for the goods, 
and against any advance that might occur in the cotton market before 
the cotton is absolutely bought in Texas. 

18 



A merchant in the South is holding one thousand bales of cotton 
in a warehouse belonging to a customer — cotton begins to decline, the 
customer has not sufficient funds to protect his cotton, and the mer- 
chant sa3's to him, ' ' You must do one of two things : You must sell this 
cotton outright and stop the loss on it, or hedge it by selling a con- 
tract against it in New York." 

A broker in New York is holding one thousand bales of cotton in 
a warehouse, paid for — some emergency arises ; he does not wish to 
sell the cotton, but wishes to borrow money upon it. He will sell 
this cotton for future delivery to cover any loss upon it during the 
period that he desires to borrow the money. Cotton with a contract 
sold against it is as current as a bank bill, and the banker will loan 
money upon it at a low rate of interest, and when the loan matures the 
broker will buy back his contract and hold his cotton unprotected, 
trusting to an advance. 

A merchant in Mississippi is daily receiving cotton from farmers to 
whom he has loaned money during the year. This cotton accumu- 
lates upon his hands about his warehouse until he has several hundred 
bales, which he proposes to ship to New Orleans for sale. He sees 
that the cotton market is weak and declining, and, knowing that it 
will take some time for this cotton to reach its destination and be sold, 
he telegraphs to New York to sell a like amount of cotton contracts 
against a shipment en route to New Orleans. When the cotton is sold 
in New Orleans he covers his contract in New York. 

An exporter shipping large amounts of cotton to Europe makes 
sales of contracts before cotton is purchased, and, on the basis of these 
contracts, mills sell their contracts for goods for future delivery. The 
exporter knows the stocks in the cotton centres, the price, &c, and 
takes the chance of selling before buying. The same exporter has 
various lots of cotton en transit to Europe — one lot will be hedged be- 
fore it is shipped, another lot will be hedged by the time it reaches 
Cincinnati, another by the time it reaches New York, another lot 
hedged in the middle of the Atlantic Ocean, and another lot hedged 
before it lands on the dock in Liverpool. If the price is going up, he 
may let it all go to Liverpool unhedged ; if it is going down, he knows 
it, every moment, during the day, and can hedge it as before stated, 
and can limit his loss. Without being able to hedge this cotton he 

19 



might never Have bought it, because he did not have money enough to 
ship it unprotected. 

Besides a hundred other ways than those above mentioned, the 
cotton-contract system protects buyers and dealers in cotton, and the 
Senator must remember that there is always a large arbitrate business 
going on between the market of New York and other markets of the 
world. A merchant in Liverpool or London will use a cable, buying 
on one side of the Atlantic and selling cotton on the other, or vice versa, 
if he can make a very small profit. 

A cotton contract is based upon cotton, and cotton alone ; its value 
is known every moment of every business day, and can also be bought 
and sold without large investments of money ; and, on this account, a 
large part of all the cotton in the world is in some manner, shape or 
form covered by contract. It is really surprising what vague ideas 
many men have about the business machinery that is required to move 
and distribute throughout the world nine million bales of cotton worth 
$400,000,000. It is also surprising that the Senator from Mississippi, 
representing a great cotton State, should advocate a measure which 
will hamper business, lessen buyers and embarrass her own people. 
Senator George and many planters may think that all that is necessary 
to procure money for the crop is to dump it down at the depots and let 
it market itself. 

We insert here an extract from a letter received from a planter 
residing at Longwood, Miss. : 

" I am much, surprised to see so many who claim to possess a good degree of 
business sense betray such a vast amount of ignorance and prejudice in their 
arguments in advocating the Anti-Option Bill ; they little realize the far-reaching 
effects such legislation will have to demoralize trade in all its branches far and 
wide. It will blight and paralyze and discourage competition, which is the real 
life of trade, and disturb and divert it from its natural channels. 

" In this age of free thought, free action and rapid progress and improvement, 
it seems strange that, while the train is speeding smoothly and rapidly along, so 
many can be found willing and read}- to apply the brakes and place obstructions 
in the way, and then cry out ' Danger ahead ! ' 

" The laws of trade seek their own natural channels, and flow freely and 
naturally when undisturbed ; but, when diverted from these natural channels by 
too much or unwise legislation, disaster and panic are sure to follow. When we 
find wise, able business men who can look ahead into the future and prepare 
for what is coming, is it not unfair — is it not madness and insanity — to call such 
men gamblers? 

" There can be no truth in the wild cry that dealings in futures depress prices 

20 



and bring injur}- to the producer. Those who make this claim forget (if they ever 
knew) that there must be a purchaser for every seller. While there is a future 
market, the planter can have the advantage of this, and sell his crop at any time 
during the year when the price of cotton justifies the sale, and is not compelled to 
wait until he has made and shipped his crop at the close of the } 7 ear." 

The above brief letter contains more practical ideas about business, 
and more logic concerning the Anti-Option Bill, than is contained in 
the speech of Senator George of Mississippi, covering twenty-six 
columns of the Congressional Record. 

The Senator says that the business in cotton contracts is increas- 
ing. Of course it is, for when this system is investigated and under- 
stood, it is readily adopted by the cotton trade of the country. When 
the farmers were cutting wheat by hand they found out that absolute 
necessity required some other system. A piece of machinery, called a 
reaper, came into existence, and that reaper with its improvements is 
run by steam, and the scythe blade has disappeared forever. Ever since 
the foundation of'our Governments, Southern Senators have been noted 
for their oratory, quick perception, sound logic and a fearlessness in 
expressing their opinions. Their speeches on the floor of the Senate 
were usually listened to with rapt attention. They investigated diffi- 
cult problems that were likely to seriously affect the business of the 
whole country ; but, to anyone reading the speech of Senator George 
of Mississippi, it would appear that he had fallen far below the stand- 
ard of his predecessors. 

The Senator objects to the interjection into the business of this 
country new methods unknown to our fathers, &c. The Senator for- 
gets that, unless new and improved methods had been interjected for 
the purpose of cultivating, preparing and removing cotton to market 
at less risk and less loss, it would to-day be impossible, to distribute 
our crops throughout the world. The methods of our fathers were 
good in their day, but the Senator is aware that the people of the 
world who came after them never turned back to adopt those methods. 
They were good enough when lint was picked from the cotton seed by 
hand, because few people wanted cotton then. They were good 
enough when the bowstring was used for cleaning and beating cotton. 
They were good enough when the old-fashioned roller gin was in use, 
but none of these methods for increasing cotton production were good 
after Ely Whitney, in 1793, invented the saw gin and put it into 

21 



practical operation in 1794. To pick by hand enough cotton lint from 
the seed to make 9,000,000 bales would require an age of time and 
incalculable amount of labor. In 1 79 1 , previous to the invention of the 
Whitney gin, the total American crop of cotton was only 4,500 bales, 
and our fathers, no doubt, thought then that we were making an 
enormous crop. The present sj'stem of cotton contracts grew out 
of absolute necessity, and it has progressed as cotton inventions have 
progressed, and it will never be abandoned by the civilized nations of 
the world, even though the genius of the American ' ' Statesman ' ' 
should throw an obstacle in its way. Men now look to the future and 
forget the past. No sound or well-established principle that econo- 
mizes labor, time and expense, and that facilitates trade, has ever been 
abandoned. Every man in business must look to the future for his 
success ; ever} 7 planter who puts cotton seed in the ground looks to 
the future for his profits — in fact, the farmer begins to speculate and 
gamble on the future from the very moment that he buys or rents his 
land. 

We quote an editorial article from the New York Sun of yesterday, 
which explains most admirably the great extent to which the future 
must be relied upon : 

Shai,i, the Future Be Abolished? 

"The object of the Anti-Option Bill is twofold. So much appears from 
the speeches of its champions in the Senate. On its economic side the bill 
is a measure providing that dealers in futures shall be taxed for the supposed bene- 
fit of the farmers ; for the real benefit, as is charged, of the great Northwestern 
millers, whose friend, Senator Washburn, is the chief of the Anti-Optionists in the 
vSenate. On the moral side, the bill is urged as a means of restricting the sin of 
gambling. The moral and improving remarks of this kind made by Senator 
Peffer, of Kansas, are truly affecting, and soaked with that high Roman virtue 
which we look for in a Populist chief. 

" If Senator Peffer's brains were not as tangled and unkempt as his whiskers, 
we might take the trouble of asking him to give his notion of gambling and to 
define the proper limits of State restriction of gambling. If a farmer, either from 
optimism of temperament, or a roseate view of the prospects of live stock, or an 
expectation of virtuline scarcity, refuses to sella calf to a butcher to-day, and holds 
that calf for a rise, is that farmer not gambling in futures ? If a farmer mortgages 
his farm or a planter his cotton crop, is not such a mortgage a speculation in 
futures ? If Cincinnatus Gallus contracts to furnish Marcus Mercator with three 
dozen eggs a week at so much a dozen, is not that a dealing in futures, and an 
uncertain banking upon commodities that may never exist, or the existence of 
which depends upon the digestive powers .and aversion to sedentary affairs of 
Gallus' hens? If Mr. Peffer makes a contract with a Washington barber for the 
annual pruning of that aboriginal forest, is not that a dealing in futures? Is not 

22 



every bargain, every acceptance or refusal of a price for a certain commodity, a bit 
of gambling? Somebody will probably lose by that bargain — that refusal to make 
a bargain. Each party is gambling that the price of that commodity will or will 
not go up subsequent to the bargain or the refusal to make one. All business con- 
tains the element of chance, and whether the subject of any particular transaction 
be an existing or a non-existing amount of a certain commodity makes no difference. 
Mr. Peffer might, in fact, object with just as much reason to the substitution of 
checks for money. 

"Knowledge, capital, foresight, will always be great, and in the long run the 
greatest factors in business, but the element of chance cannot be eliminated ; nor 
is that element the main element in transactions in options. Only the ignorant 
speculator, blindly rushing into the market, trusts all to chance. 

' ' If Mr. Peffer and his friends want to abolish speculative operations, they 
must in fairness strive to abolish all speculative operations — a large contract, but 
one that can be executed by famishing or putting to death most of the inhabitants 
of the United States. If Mr. Peffer and his friends want to prohibit dealings in 
futures, the}- must abolish in the human constitution the hopeful and the despond- 
ent propensity, the eternal bullish and the eternal bearish, as the philosophers of 
Mr. Henry Villard's fatherland would say. Furthermore, the Anti-Optionists 
should try to pass a law providing that every man not a farmer or a miller million- 
aire, shall be compelled to sell and buy at the other man's price. Or a simpler 
and better means of abolishing dealing with futures would be to abolish the future. 
As the wit said : ' What has posterity done for us ? ' And whatever may be the 
case with Democratic Anti-Optionists like Senator George, or Republican Anti- 
Optionists like Senator Washburn, there can be no considerable future for Populists 
like Mr. Peffer, so that he and they ought to resolve, and can afford to resolve, 
that the future ought to be, and hereby is, abolished. The inanity of their political 
proceedings seems to show that they already regard such a resolution as a part of 
the statute book." 

Since last July it appears from what he states in his speech, 
that he has made absolutely no progress towards understanding 
a great business system, involving hundreds of millions of dollars 
and the prosperity of millions of people. He states propositions 
and makes deductions from them that are hopelessly grounded in 
error. He is on the wrong side of a great economic question, 
does not understand it, and makes assumptions that he cannot 
sustain by proper investigation. He may have considered the question 
so unimportant as to justify him in remaining at home in Carrolton, 
and trusting to information from that quarter only. 

Instead of seeking information where it could be found, he 
makes a speech in the Senate of the United States that can only appeal 
to prejudice, and only makes his own ignorance on the subject under 
discussion more apparent. 

The Senator, in discussing the Anti-Option Bill, shows astonishing 
unfamiliarity with it, and, at the same time, does not fail to assail the 

23 



gentlemen who transact business in contracts and contribute so much 
towards the country's progress and prosperity. The opponents of the 
Anti-Option Bill assail no one. They simply enter their earnest pro- 
test against the passage of a measure that will not only prove injurious 
to the business interests of the South, but to the whole country. 

The Anti-Option Bill proposes to eliminate buyers of cotton who 
handle it in various ways, who buy it for speculation, who pay the 
planters cash money for it, which enables them to pay their debts to 
their merchants, &c. With this element out of the way, how could the 
Senate hope that the same buyers would go into the South and invest 
their money in an article that was uncurrent, with no facilities to 
handle it or to stop losses upon it ? If these men — the merchants, 
bankers, traders, speculators, &c. — do not buy the cotton, the planters 
or home merchants would have to carry it. How could, they carry it? 
Planters in the South in the spring of the year borrow money from 
banks, bankers and merchants to assist in making their cotton crops, 
and these debts are made payable usually November first and December 
first. This credit is based upon the production of cotton that the 
farmers hope to sell before their notes and accounts are due. These 
notes are negotiated in many ways — a large part of them come direct 
to New York for sale or discount. Banks and bankers in the South 
loan money to the merchants and planters, and these banks and bankers 
borrow each year large sums of money in this city to move the cotton 
crop. The passage of the Anti-Option Bill — it is intended to be so — 
will eliminate the prompt and active buyers of cotton who carry the 
farmers' surplus. In other words, the cotton that is now sold in four 
months, which is three-quarters of the crop, would not be marketed 
perhaps in twelve months. Would the banks in New York loan money 
upon an article that had been discredited — that had no active current 
value? Would the bankers in the South carr}- it for the merchants 
when it could not be sold readily ? Would the country merchants buy 
it from the planters when they could not move it freely to market and 
draw at sight against it? In the present condition of the South, how 
much of the surplus stock — which is nearly 4,500,000 bales outside of 
the hands of spinners, and worth, say, $200,000,000 — could the banks and 
merchants carry on their own resources? The planters in the South 
and every bank in the South could not buy back from the speculators, 

24 



operators and dealers even $50,000,000 of this cotton and pay for it ; 
and, had it not been sold to the buyers that the Anti-Option Bill proposes 
to take away from the planters, cotton would be congested in every 
town, county and city in the whole Southern country, which would 
cause ruin and bankruptcy to the great majority of dealers. 

Business men of long experience who have made a study of finance 
and rules of trade, and have given careful observation to all the changes 
that have occurred, oppose the Anti-Option Bill, because they are 
confident that the passage of such a measure would revolutionize the 
present excellent system, would embarrass business everywhere, 
unsettle values, and eventually bring disaster to the country. It 
would take away from the farmer many buyers of his cotton, and leave 
him at the mercy of a few. The planter cannot have too much com- 
petition for the purchase of his cotton. His cotton is produced to sell, 
and it is a fact beyond controversy that the more buyers for any 
article the better the price is likely to be. The Anti-Option Bill leaves 
the planter to rely solely upon the consumer, and what a reliance that 
would be ! A planter who raises a thousand bales of cotton, naturally 
wishes to sell it to pay his debts due November first. The consumer 
would tell him he might want the cotton in the course of a year — wait 
until July or August, and he would come along and take it. The 
planter would be obliged to say, "This I cannot do, for I must sell my 
cotton promptly to meet my obligations." The speculator comes along 
with cash in his pocket. He says to the farmer, "I will not only buy 
your cotton now and pay cash for it, but will give a better price than 
the consumer. ' ' The more currency an article has the more desirable it 
is. Under the contract system, cotton is as current as money. On this 
account it is handled and moved about the world, not only with 
expedition, but with less outlay of money than perhaps any article of 
like value. The Anti-Option Bill means that cotton shall not have cur- 
rency ; that it must wait on plantations or in the hands of factors and 
merchants until consumers will take it. It is proposed that this great 
article of commerce, yielding nearly $400,000, 000, and bringing nearly 
$300,000,000 of gold to our country annually, shall be put in the same 
category with potatoes, apples and other products of the farm that 
have no importance or active ready markets. 

L,et us make an illustration : Suppose one of the leading, active 

25 



stocks that is listed on the New York Stock Exchange and daily dealt 
in, with sales of from 25,000 to 50,000 shares, should be stricken from 
the list of the Exchange. What would be the consequence ? Its value 
might not be greatly impaired, but it would become an uncurrent 
security, with but few buyers and sellers. Banks would throw it out 
of loans because there was no reliable market where it could be readily 
sold at quotations. Take a stock, for instance, like Louisville & 
Nashville, and the stock of one of the best banks in Louisville — the 
former is listed, the latter is not : 50,000 shares of the former could be 
sold in a day in the Exchange, when 500 shares of the latter might 
not be sold in a week, and, if sold, perhaps the price would be lower 
than former quotations. The currency of cotton is a great element in 
its favor. It attracts capital — buyers from all sections of the country. 
Divested of its currency, negotiations upon it would at once become 
difficult. 

In the Senator's speech last July he stated that he wanted to dis- 
pose of all the interloping and intermeddling middlemen in the trade. 
He virtually said he wanted the planters to sell their cotton to select 
buyers — the spinners. He might as well have said that he desired 
that they should sell their cotton to the celebrated ' ' Four Hundred ' ' in 
New York. 

Let us again illustrate : It is possible that the Senator wears a 
ready-made coat. If he does, the farmer sold the wool out of which 
the coat is made to the wool dealer in some country village ; he sold it 
to a wool dealer in New York ; that dealer sold it to a manufacturer of 
woolen goods ; that manufacturer sold his goods by sample to a 
manufacturer of clothing ; that manufacturer of clothing sold the coat 
when made to a jobber or wholesale clothier in New York ; that jobber 
sold it to a wholesale dealer in the City of Memphis, and that jobber 
in Memphis sold it to a retail merchant in Carrolton, Mississippi, and 
the Senator made the purchase from him. It will be seen that the 
Senator, when buying this coat, paid seven profits upon it. Why 
don't the Senator ignore the middlemen in the purchase of a coat? 
Because only one man — the retail man — can sell him one coat. If he 
were to send this order to the manufacturer or jobber in New York, or 
the wholesale dealer in Memphis, he would say, " Our goods cannot be 
distributed by retail. They must go through regular channels to 

26 



market. If not, our business would be embarrassed." And the same 
thing applies to cotton. It must have currency ; it must have channels 
of distribution ; it must have facilities to move it in large quantities. 
The farmer cannot dispense with middlemen. They cannot live on 
their plantations and attend to their business, and be buyers, 
merchants, exporters, speculators and bankers. These different call- 
ings are necessary to complete the machinery of trade. They are 
indispensable, and the planter cannot conduct business unless he pays 
some tribute to the men who furnish the money to raise the crop, and 
who buy it and distribute it everywhere. 

Suppose a dry-goods commission house in the City of New York, 
that represented mills in the South, should put up over its door a sign 
saying that the firm would only sell goods to buyers who wore them. 
What would a business community like New York think ? They would 
think that the firm was a set of lunatics. If not, their business opera- 
tions would be so small that they could not pay drayage. Suppose the 
Senator were to put up a sign over his law office, and write under his 
name that he would transact legal business only for clients who had 
attained the age of 50, or who had a bank account of $50,000. How 
many clients would he get? All business requires the largest field 
possible, and the planter requires the whole world to distribute his 
cotton. He wants buyers without limit. The Anti-Option Bill limits 
the planters' buyers. It will contract his operations — it will tie him 
hand and foot. Senator George would seemingly have the planters of 
Mississippi organize a Home Guard and put muskets in their hands to 
drive away buyers who had money in their pockets to pay for their 
cotton. 

We quote an extract from BradstreeV s touching the speech of Sena- 
tor George and the poverty of the South, which he attributes to trans- 
actions in cotton in the New York and other Cotton Exchanges : 

"The first grossly inaccurate statement of importance in the speech is that : 
* * * " 'The persons who produce cotton have been year by year be- 
coming poorer and poorer, becoming more and more the victims of a rapacious 
policy [meaning trading in "futures"] which has taken their earnings and added it 
to the already overgrown wealth of the men who use imperiously the great powers 
of associated capital in five places — New York, New Orleans, Liverpool, Havre and 
Bremen.' 

"The foregoing is silly as well as misleading. The South is not becoming 

27 



'poorer and poorer,' or the South would not present, as it does to-day, a picture of 
enterprise, industry and increasing prosperity beyond all preceding records. 

The Baltimore Manufacturers' Record has been interviewing leading business 
houses at the South as to the commercial outlook for the coming year, and sum- 
marizes the replies as follows: 'The financial stringency is over, credit has been 
re-established, and there is an abundance of money in Southern banks. A small 
cotton crop, raised at less cost than ever before, is bringing high :prices, and will 
yield a larger aggregate of profit than the immense crop of last season. An abun- 
dance of food crops has placed the South upon a self-sustaining basis. The South 
will become within the next year the scene of unprecedented industrial and com- 
mercial activity — not a "boom," but natural, unrestrained growth and progress.' " 

For more than a quarter of a century it has been the special busi- 
ness of the Bradstreet Company to ascertain by every means possible 
the condition of the various sections of our country. In Senator 
George's immediate neighborhood, or across the fence from him, times 
may be very bad ; but five hundred miles from him times may be very 
good. The Senator seems to have great animosity and prejudice 
against the New York Cotton Exchange and its operations. As a rule, 
men who have such prejudices have at some time gotten on the wrong 
side of the cotton market, and have lost money in that Exchange. 
But rational men who are not too indolent to investigate the trans- 
actions in that Exchange have high respect for it, no matter whether 
they have lost money or not. 

Every business day some man sells cotton at the lowest price, and 
some man buys cotton at the highest price. These facts pertain to all 
classes of business. If all the buyers of cotton made money, there 
would soon be no sellers ; and, if all the sellers made money, there would 
soon be no buyers. The members of the New York Cotton Exchange 
represent many States in the Union. They came to New York and 
entered into the cotton business — any man in the United States can do 
likewise. The members of the New York Cotton Exchange (and we 
have had full opportunity to know them in every branch of the trade) 
are as honest, honorable and upright as any business men to be found 
in any like association in this country or any other. Furthermore, the 
membership of the New York Cotton Exchange is familiar with com- 
mercial transactions, involving hundreds of millions of dollars each 
year, because they do the business, and know how it should be done. 
It is a part of the business of the Bradstreet Commercial Agency to 
ascertain and give correct information as to the standing of business 
men in all sections of the United States, and what they say concerning 

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the members of the New York Cotton Exchange is entitled to much 
weight ; in fact, it is next to being positively conclusive. We quote 
what they say in their editorial of December 24th : 

"The personnel of the members of the New York Cotton and Produce Ex- 
changes will probably compare favorably .with that of the United States Senate; 
but, like every other human institution, the Cotton Exchange members may pos- 
sibly at times find a dishonest or tricky person among them. One has even heard 
that all members of churches are not as good as they should be, yet few, if any, 
will stoop to criticise churches for that reason." 

Yours truly, 
LATHAM, ALEXANDER & CO. 



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